In conjunction with its revised 1,100 bn budget projection for the period 2021-2027, the European Commission has published its Next Generation EU strategy for alleviating the social and economic impact of the Covid-19 pandemic, to be financed by up to 750bn euros of borrowing.
The intention is that this borrowing will be paid back in tranches in EU budgets between 2028 and 2058, assisted by ‘Own Resource’ revenue raising measures to include an Emissions Trading Scheme, a Carbon Border Adjustment Mechanism, and an EU-wide Digital Services Tax, if the OECD does not present a global approach. A previously unheralded addition is a levy which the Commission describes as “based on operations of companies, that draw huge benefits from the EU single market, which, depending on its design, could yield around 10 billion euros per year.”
No detail has been provided at this stage of exactly how this levy might be calculated or administered, only that it is likely to be implemented towards the end of the 2021-2027 budget period (subject to agreement from member states). The European Council has tabled a review of the recovery fund plan for 19 June 2020, so we anticipate further information about the new levy at that time.